In a new series of web ads, Microsoft portrays two slot machines, one ringing up a Mac with bits of garbage, and the other presenting a cheaper generic PC along with the Zune, Xbox 360, and other things buyers could get with the money they'd save with the PC.

The banner ads are part of Microsoft's new ad campaign promoting cheap hardware, which includes new TV spots contrasting Macs with generic PCs entirely on price. There's not much mention of why the generic PCs are so much cheaper than the Macs they are contrasted with, nor any mention of software expenses.

Microsoft hardware?

Microsoft's new focus on cheap hardware prices is particularly interesting given the fact that the company has been unable to profitably market its own hardware devices outside of its Microsoft-branded keyboards and mice that it bundles with many new PCs as part of its Windows software licensing.

The company has spent billions on the Xbox 360, which is even now only barely clearing a hardware profit before considering the hardware repairs that have plagued the game console. With the Zune, Microsoft has been completely unable to create any impact within the market for MP3 players dominated by Apple's iPod.

Selling software with hardware, and vice versa

Microsoft is a software-centric company. It has long sold its software using cheap hardware. However, Microsoft's software isn't cheap. Retail upgrades for Windows are nearly twice as expensive as Mac OS X, and infinitely more expensive than Linux, which can be obtained for free.

While the need for software compatibility with Windows has long rendered Microsoft's operating system monopoly untouchable, the emergence of new computers that rely more on the web and email have broken that hold. Ubuntu markets a low cost distribution of Linux to PC makers exploiting that new market.

Apple has added sophisticated music, photo, and movie editing software to its web and email offerings, positioning the company's Macs as not just a suitable alternative to Windows PCs, but also more useful and valuable option right out of the box. That pits Apple's business model of selling hardware with cheap software directly opposite to Microsoft's business of selling its software on cheap hardware.

What happened to "Total Cost of Ownership"?

Macs not only bundle in free software missing on the PC side, but also offer personalized support in Apple's retail stores, which is free to those who don't mind standing around waiting for an available genius, and very cheap to users who want a regular One-on-One membership that allows them to visit the stores for virtually unlimited advice and training sessions.

If Microsoft portrayed the software and support expenses of generic Windows PCs into its slot machine graphics, the results would be less flattering.

Macs have a higher TCO as well. When components in a PC become outdated or you need a new feature like USB 3.0 or eSATA or something else that didn't come with the machine, you can upgrade it for the price of a cheap PCI or ExpressCard add-on. With Macs, you have to throw the computer away and get a brand new one at full price, unless the Mac is one of the extremely overpriced "Pro" models.

They cost more up front, and they don't last as long. It's unfortunate that OS X can't legally run on anything else.

Isn't the definition of insanity doing the same thing over and over and expecting different results? In which case Balmer can add Insane to Idiot and Gasbag on his list of personality traits. I mean, if Microsoft really wants to promote their junk (product) as low cost, shouldn't they sell it in KMart and Wallmart? And maybe Dollar Store? I suspect they will be that desperate soon.

... Macs have a higher TCO as well. When components in a PC become outdated or you need a new feature like USB 3.0 or eSATA or something else that didn't come with the machine, you can upgrade it for the price of a cheap PCI or ExpressCard add-on. With Macs, you have to throw the computer away and get a brand new one at full price, unless the Mac is one of the extremely overpriced "Pro" models.

They cost more up front, and they don't last as long. It's unfortunate that OS X can't legally run on anything else.

I guess your just a troll or an astroturfer, but I have to point out that everything you say here is 100% wrong. Almost any study on the matter ever done comes to the conclusion that Macs have a *lower* TCO.

To be specific, your argument is "full of it" in that:

your upgrade parts also have a cost that needs to be factored in

Macs last typically far longer than a regular PC.

most support and repair costs are built into the price on a Mac

no antivirus or "repair" programs needed to purchase

In Windows, a window can be a document, it can be an application, or it can be a window that contains other documents or applications. Theres just no consistency. Its just a big grab bag of monkey...

Isn't the definition of insanity doing the same thing over and over and expecting different results? In which case Balmer can add Insane to Idiot and Gasbag on his list of personality traits. I mean, if Microsoft really wants to promote their junk (product) as low cost, shouldn't they sell it in KMart and Wallmart? And maybe Dollar Store? I suspect they will be that desperate soon.

Gordon

I think you are a bit confused by something here....

A PC != Microsoft

Also...

You can buy PC hardware at Walmart and you can buy Microsofts software at Walmart so I am not sure where you were going there??

Macs not only bundle in free software missing on the PC side, but also offer personalized support in Apple's retail stores, which is free to those who don't mind standing around waiting for an available genius, and very cheap to users who want a regular One-on-One membership that allows them to visit the stores for virtually unlimited advice and training sessions.

If Microsoft portrayed the software and support expenses of generic Windows PCs into its slot machine graphics, the results would be less flattering.

Macs have a higher TCO as well. When components in a PC become outdated or you need a new feature like USB 3.0 or eSATA or something else that didn't come with the machine, you can upgrade it for the price of a cheap PCI or ExpressCard add-on. With Macs, you have to throw the computer away and get a brand new one at full price, unless the Mac is one of the extremely overpriced "Pro" models.

There are no PCI slots on all-in-one PC's either. Apple doesn't compete in the traditional desktop market, if they did, the desktops would have PCI slots. Compare apples to apples and oranges to oranges my friend. You have a point on the macbooks, although the average person won't add an expresscard in the first place.

On a side note: you can have a BMW and a Chev with the same horsepower, that doesn't make the cars comparable. The same applies to computers. You may not need lightweight and thin laptops made from aluminum not plastic, you may not need ambient light sensors that autmatically adjust screen and keyboard brightness, or a slot-loading drive, or multi-touch, or a magsafe cord, or a hard drive drop sensor, etc. The fact that you don't need/want those things doesn't mean they don't add to the cost.

If Microsoft portrayed the software and support expenses of generic Windows PCs into its slot machine graphics, the results would be less flattering.

Actually what I think would be more accurate is to post that, comparing to the cost of a Mac, you could buy a PC. And a yearly subscription to an Anti-Virus program. And a few visits from the geek squad to reinstall your operating system twice a year to remove malware. And a piece of lint.

Macs have a higher TCO as well. When components in a PC become outdated or you need a new feature like USB 3.0 or eSATA or something else that didn't come with the machine, you can upgrade it for the price of a cheap PCI or ExpressCard add-on. With Macs, you have to throw the computer away and get a brand new one at full price, unless the Mac is one of the extremely overpriced "Pro" models.

They cost more up front, and they don't last as long. It's unfortunate that OS X can't legally run on anything else.

Very true. This is my biggest complaint about the current Mac lineup. Selling intentionally closed boxes inherently shortens the usable life of the computer. Macs used to have a longer serviceable life, that's simply not the case any more.

Of course none of that is relevant to the ads which are comparing laptops. In that case, closed boxes on both sides. Same parts, made in the same factories, only real differences are the OS and the price. And the Mac laptops are grossly overpriced for the components they contain. It's like OS X is a $1000 add-on.

Apple realized somewhere along the way that only a vanishingly small percentage of users who buy expandable computers actually utilize that expandability in any way whatsoever. The average home PC or corporate desktop PC does not have any extra PCI cards installed, nor do they bother upgrading their video card. Heck, they can usually barely be bothered to add more RAM. The average laptop user does not have any PC cards or ExpressCards to put in those slots.

While Apple has been known to over-aggressively phase out aging tech, I think they really do a good job of observing how their customers really use their computers.

People have always known that Macs are more expensive than generic PC boxes. And quite different, too.

Microsoft is simply reaffirming their cheap, bargain-basement image.

Kind of sad when the only real differentiation they can manage to pull out of their R&D budget is price. But then, look at their management. Look at their awkward, laughable keynotes. It all comes as no surprise when you think about it.

Meanwhile a Mac is completely, unequivocally different from a PC. Like night and day. It's a premium product and will always sell as such. People are aware of this also.

But I love seeing what Microsoft is trying, but can never manage, to pull off. A slick, simple, ad campaign. Then again, look at Windows. The reasons are all there. Cheapness resonates throughout the entire company.

Apple should just reply with a "You get what you pay for" campaign. They can follow people around as they dash madly to the store to buy anti virus software, or wonder why every other site they go to on the web showers them with hundreds of popups. They can show a PC user at a bank arguing that their identity was stolen because they kept sensitive information on their PC, not realizing it had already been infected...

It seems as if i'm the only one who sees the irony in MS attacking Apple's overpriced hardware,at the same time that MS does not produce its own hardware [ except the Zune ]..... instead of making those stupid ads it would be better for MS to work on their software,now that they still get people to give them a second chance with Windows 7,and through that try to win me over back again to use their products. Because honestly there is absolutely no chance that they are going to make me start hating Apple and its "overpriced" products...... Ever since i switched to OSX as my primary OS and Mac as my primary hardware,there has not been a single day that i would feel like smashing my machine.And for that alone MS i am willing to pay even more at Apple!!!! Simple as that. Apple's OS works like a charm on my Mac and i haven't had a single hardware issue with my mac ever since i jumped on the wagon - around 8 months ago - ...

So to end this i think that first step is to make your own hardware and then you get to criticize other companies' prices on their own hardware...then work on your operating system.

The writer also brought up a very valid point...the one of the total cost of ownership...nuff said!

There are no PCI slots on all-in-one PC's either. Apple doesn't compete in the traditional desktop market, if they did, the desktops would have PCI slots. Compare apples to apples and oranges to oranges my friend. You have a point on the macbooks, although the average person won't add an expresscard in the first place.

On a side note: you can have a BMW and a Chev with the same horsepower, that doesn't make the cars comparable. The same applies to computers. You may not need lightweight and thin laptops made from aluminum not plastic, you may not need ambient light sensors that autmatically adjust screen and keyboard brightness, or a slot-loading drive, or multi-touch, or a magsafe cord, or a hard drive drop sensor, etc. The fact that you don't need/want those things doesn't mean they don't add to the cost.

People have always known that Macs are more expensive than generic PC boxes. And quite different, too.

Microsoft is simply reaffirming their cheap, bargain-basement

Unfortunately some people fall for that. In reality MS is a computer software company. The retail price of Vista Ultimate ($319.95) is more expensive than Apple's Mac OS, iWork, and iLife combined ($169)!

People have always known that Macs are more expensive than generic PC boxes. And quite different, too.

Microsoft is simply reaffirming their cheap, bargain-basement image.

Kind of sad when the only real differentiation they can manage to pull out of their R&D budget is price. But then, look at their management. Look at their awkward, laughable keynotes. It all comes as no surprise when you think about it.

Meanwhile a Mac is completely, unequivocally different from a PC. Like night and day. It's a premium product and will always sell as such. People are aware of this also.

But I love seeing what Microsoft is trying, but can never manage, to pull off. A slick, simple, ad campaign. Then again, look at Windows. The reasons are all there. Cheapness resonates throughout the entire company.

Just wanted to say that I enjoy your comments. I've been reading them in this and other threads here and they're spot on.

I often wonder why Macs and Windows based machines can't just peacefully coexist. To me, they cater to different markets.

I did own a Mac for a short time--a PowerMac Dual G4 (1.3 GHz) running OS X Tiger, and I absolutely loved it. Everything was so intuitive--it seemed like it more closely meshed with my own thought processes and what I wanted out of an OS. And the hardware worked so much more harmoniously with the OS than I had ever experienced with a Windows machine. Unfortunately I had to sell it during a time when my family was strapped for cash.

Now we are intensely devoted to getting out of debt and putting off any unnecessary expenses until that goal is achieved. For the time being, I am using what I refer to as my "custom junker" PC for my computing needs. When the time is right, I will be buying another Mac. Could I buy a cheaper Windows based machine sooner? I could, yes. And I might even be somewhat pleased with it. But it wouldn't be a Mac. Delayed gratification is worth it.

And I'll probably keep my "custom junker" and upgrade it piece by piece for the sheer fun of it, because I'm a computer geek like that.

"For the same price as an 8 oz. top sirloin, you can get a Big Mac and still have money left over to buy a fake chocolate milkshake, a "High School the Musical 3" DVD at WalMart and a 53 Snugglies for your family!!"

The Mother of all flip-flops!!Support our troops by educating yourself and being a responsible voter. Democracy and Capitalism REQUIRE Intelligence and Wisdom if they are to be worth a damn beyond...

I'd like to think that Microsoft's top management is more competent that it seems, but these kind of "marketing openings" really make me think again. It seems that they only know one business model (their own) and have never even heard of a thing called market positioning.

Historically, in recession times, the high-end doesn't really move. People who appreciate the benefits of a high-end product but can't currently afford one, will propably delay their purchase until they've saved enough money. Meanwhile, in the low-end, bad economy only accelerates the price erosion which is charasteristic to the low-end market even when economy is just fine.

If things go really well for Apple, they could get maybe 20 percent of the computer market some day. They're neither capable nor willing to gain any more. But that 20 percent is where 80 percent of profits are. All PC OEM's are currently shitting in their pants because they're heading for the no-profit segment (junky netbooks and so on...). Lots of volume, very little profit.

Now, what does Microsoft? Launches an ad campaign that doesn't really affect Mac sales, but does promote the price erosion of PCs. "You can get all your stuff done with a 700 dollar HP" (so why would you spend 1400 dollars on an HP). People who see the Mac benefit are not convinced, but the rest understand that 700 dollars is the current street price for a computer, no point paying any more. And once the economy goes up again, Apple completely owns the profitable segment of the market. Really smart.

I know that the less talented of our Steves is an old-school salesman in heart and only cares for short-term revenues. For now, Microsoft gets its own, no matter whether poor HP sells its gear for 700 or 1400 dollars. But doesn't he really understand what he's doing to his own Windows-driven ecosystem in longer term?

Assuming that PC OEM's have some competence in their management, what do those guys at HP or Dell or Lenovo think about Microsoft's marketing right now?

Hell, Dell just launched their brand new wanna-be-Mac computer, hoping to counter the ever-shrinking margins.

Macs have a higher TCO as well. When components in a PC become outdated or you need a new feature like USB 3.0 or eSATA or something else that didn't come with the machine, you can upgrade it for the price of a cheap PCI or ExpressCard add-on. With Macs, you have to throw the computer away and get a brand new one at full price, unless the Mac is one of the extremely overpriced "Pro" models.

They cost more up front, and they don't last as long. It's unfortunate that OS X can't legally run on anything else.

My experience has been completely opposite. My MacBook has already out-lasted three PC laptops owned by family members. They have all had to go out and get new machines.

What PC can be upgraded where a Mac can't? PC tower machines have PCI slots, so do Macs. I've upgraded the memory of my laptop (which I did in five minutes) and I'll do the same with my hard drive. What am I missing out on here? USB 3? There's no USB 3.0 devices yet. Why bother?

Actually what I think would be more accurate is to post that, comparing to the cost of a Mac, you could buy a PC. And a yearly subscription to an Anti-Virus program. And a few visits from the geek squad to reinstall your operating system twice a year to remove malware. And a piece of lint.

Macs have a higher TCO as well. When components in a PC become outdated or you need a new feature like USB 3.0 or eSATA or something else that didn't come with the machine, you can upgrade it for the price of a cheap PCI or ExpressCard add-on. With Macs, you have to throw the computer away and get a brand new one at full price, unless the Mac is one of the extremely overpriced "Pro" models.

They cost more up front, and they don't last as long. It's unfortunate that OS X can't legally run on anything else.

Charles.. for an example. browse Amazon and see how many USB 3 devices are available. Its not an standard adopted yet for user less for companies.
eSata, why would any Mac user go for that standard if we been using Firewire almost a decade ago since the Powerbook Pismo.
My powerbook titanium still works. I have customers with G3 Power Macs and Quadras running and most important making money for their owners. The life spam of Mac software is longer. There is a lot of people running Mac OS 8.1 and 9.

Macs not only bundle in free software missing on the PC side, but also offer personalized support in Apple's retail stores, which is free to those who don't mind standing around waiting for an available genius, and very cheap to users who want a regular One-on-One membership that allows them to visit the stores for virtually unlimited advice and training sessions.

that is totally misleading. the One to One program (which I bought last year and am about to renew) is not unlimited advice etc. it is individual training sessions. but you can get most of that advice for free just by walking in and asking any available sales person. you don't have to buy into One to One for that.